PetSmart Acquires Pet360, Increases Net Income By 5.1%

Pet360PetSmart has acquired online pet products retailer and integrated media company Pet360 for $130 million to ramp up its e-Commerce business. With the purchase, PetSmart will provide customers with seamless access to the Pet360 e-Commerce site, digital media programs and content sites. The transaction is expected to close in September 2014 and is subject to customary closing conditions.

“As discussed previously, although online sales are still a relatively small part of the pet products industry, we expect them to become a more relevant source of revenue in the future,” said David Lenhardt, President and CEO of PetSmart. “Combining PetSmart’s unparalleled strengths in traditional outlets with Pet360’s established digital footprint will perfectly position PetSmart to capitalize on this evolution and enhance our ability to serve pet parents across all distribution channels.”

News of the Pet360 acquisition was announced during the PetSmart quarterly earnings call. During the live event, executives revealed that net income for Q2 2014 increased by 5.1% to $98 million, versus $93.4 million in Q2 2013. The retailer also posted a 10.1% increase in year over year earnings per share, with Q2 2014 earnings totaling $0.98 per share.

As part of a long-term growth initiative, PetSmart is broadening its assortment of grocery store and mass brands, and will be introducing more proprietary and exclusive brands.


“Everything we are doing is aimed at continuing to build unparalleled customer loyalty through innovation and creating a best-in-class, more personalized customer experience,” Lenhardt said. “We are also instituting more effective pricing and promotion strategies, improving cost and margin discipline and better leveraging our unrivaled scale and distribution infrastructure.”

However, PetSmart also has implemented a new cost reduction program designed to restructure the cost base of the company. The program will target all areas of the business, including cost of goods sold, logistics, sourcing, store operating costs and overhead. The company will provide target goals in Q3 2014 and expects to realize savings before the end of the 2015 fiscal year.

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